Small cell backhaul and Wi-Fi offloading are points of contention that must be addressed if the FCC is to approve Verizon Wireless' (NYSE:VZ) proposed $3.9 billion AWS spectrum purchase and business agreements with four cable operators, according to an FCC filing submitted by Sprint Nextel (NYSE:S).

Sprint said it has not formally opposed the proposed sale of AWS spectrum by SpectrumCo--a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks--as well as Cox Communications to Verizon, but it is concerned about the impacts that the bilateral commercial agreements Verizon is drawing up with each firm may have on Sprint's business if regulatory restrictions are not mandated.

The operator's ex parte filing revealed the gist of conversations held June 15 among three Sprint representatives--Lawrence Krevor, vice president of government affairs; Trey Hanbury, director of government affairs; and outside counsel Antoinette Cook--and FCC Commissioner Mignon Clyburn with two other FCC staffers.

Backhaul is a crucial issue for Sprint given that its Network Vision initiative includes heterogenous network (HetNet) topology that includes microcells, which the operator said require additional backhaul connections from incumbent local exchange carriers (ILECs) and cable TV providers. Sprint contends the commercial agreements between Verizon and the cable companies will create a joint interest "against competitive backhaul pricing for competing wireless carriers" such as itself.

One intriguing revelation in Sprint's ex parte filing is that the company "has found that wired network operators are charging the same backhaul rates for microcells, covering small areas, as they charge for connections to macrocells with much wider coverage and generally much heavier use." This pricing scheme, Sprint noted, "makes network expansion through microcells much more difficult."

The operator contends that if the cable companies stop competing effectively with Verizon on backhaul pricing, "there is little hope for relief" from such pricing anomalies.

Sprint said the FCC should require the cable companies and Verizon to provide backhaul services to all wireless carriers on a non-discriminatory basis, "with costs proportional to the requested capacity of a line."

Of course, Sprint could deploy its own backhaul alternatives for small cells--including fiber and millimeter-wave equipment. However, those options would entail upfront capital expenditures, possibly including wireless licensing fees, which leasing fiber backhaul capacity from ILECs and cable providers does not.

A recent report from Monica Paolini at Senza Fili Consulting noted per-link costs of $2,000 with high capacity and extremely compact form factors are needed to close the business case for both sub-6 GHz licensed and millimeter-wave--including 60 GHz and e-band--backhaul solutions. Paolini said that at a $2,500 per-year lease price, fiber becomes more cost-effective than wireless, but added that in most markets lease prices for fiber are higher than that figure.

In fact, there may have already been an impact, as Sprint said it was "engaged in discussions with several large cable companies about the use of cable Wi-Fi by Sprint customers, but the cable companies broke off those talks late in 2011," prior to the announcement of Verizon's proposed transaction with the cable operators.

If Verizon is allowed to sign commercial agreements with the cable companies with no regulatory restrictions, that "would give the cable companies a financial incentive to deny Wi-Fi access to Verizon's competitors, to the detriment of customers of Sprint and other wireless competitors," said Sprint.

"Cable Wi-Fi networks have been constructed on the backbone of franchised cable systems, taking advantage of preferential rates for access to utility poles, ducts and rights of way," said Sprint, adding, "The cable networks and the older ILEC networks--built under monopoly regulation or monopoly franchises--are impossible to economically duplicate."

The company further argued that competing wireless carriers cannot build their own Wi-Fi networks without using the wired backbone networks that the cable companies and ILECs control.

Therefore, Sprint wants the FCC to require the cable companies to open their Wi-Fi networks to customers of all wireless operators on a uniform and nondiscriminatory basis. "Any Wi-Fi technologies or protocols developed by the cable companies and Verizon through their joint venture must be made available to all wireless carriers at nondiscriminatory rates and terms," the operator added.

Sprint also addressed the topic of spectrum concentration, which has been brought up by many other commenters, including the Alliance for Broadband Competition, a group backed by T-Mobile and the Rural Cellular Association and supported by Sprint. The operator suggested the commission assure that any spectrum divestitures it requires of Verizon in exchange for approval of the AWS purchases include spectrum of comparable readiness and utility for competitive wireless broadband communications services.

Public interest group Public Knowledge also held FCC meetings on June 15. In its ex parte filing, the group continued to oppose Verizon's deals with the cable operators. However, it said that should the FCC approve the AWS spectrum transfers, the commision should also include a "use it or share it" condition that would require any spectrum unused by Verizon by 2016 to be added to the TV white-space database for use by white space devices. "The spectrum would continue to be available for use on an unlicensed basis until Verizon builds out," said Public Knowledge.

In December, Verizon agreed to pay $3.6 billion for the nationwide AWS spectrum licenses held by SpectrumCo. Separately, Verizon said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million. All of the deals include the option of Verizon reselling cable services and cable companies reselling Verizon service. The cable companies can also become MVNOs of Verizon.

Both the FCC and Department of Justice need to sign off on Verizon's deals.